Tuesday, December 16, 2014

Robert Prechter warned of this. It doesn't matter if you traded right, if you can't cash in your nominal winnings:

Dear Client,

Please be advised that that most Western Banks have stopped pricing USD/RUB. As such, FXCM can no longer offer this instrument to our clients and will begin closing any existing client trades in USD/RUB effective at Noon EST today, December 16th, 2014,

So for those curious why there appears to be a collapse in Ruble volatility in the past few hours which in turn has sent both stocks and crude soaring, the answer is simple: nobody is trading it!

And this is what happened following the post: as soon as all those
short the RUB (long USDRUB) realized they have to take profits, the USDRUB tumbled some 500 pips (!) in the process sending stocks surging.

We appear to have a full-blown financial war underway. I wonder how long it will take Putin to put the ruble on the gold standard. That's always been his trump card; it eliminates Russia's ability to play the money multiplication game, but in the end, will provide Russia with a sounder currency than the so-called currency of last resort.

I just have this real uneasy feeling that this shit could so quickly spiral out of control. I just read where a top Russian Banker and Putin confidant has said that if Russia is kicked out of swift, the American ambassador should leave Moscow the same day, as it would mean war. Interesting times indeed.

lol libertarians and their inane obsession with the gold standard. Putin is going to lose this economic war and lose it badly. He just doesn't have what it takes. He never really did. His decision to let his oligarchs bleed Ukraine dry is coming back to haunt him with interest. And with opec killing gas prices he has nowhere to go but down.

I think Obama doesn't get enough credit for his foreign policy either. Middle eastern mudslimes are busy killing each other, Russia's tanking, and the lower gas prices are also harming conservative leaning oil industry in the US. He's either a master strategist playing the retard or the luckiest bastard in the history of the united states.

I think Obama doesn't get enough credit for his foreign policy either. Middle eastern mudslimes are busy killing each other, Russia's tanking, and the lower gas prices are also harming conservative leaning oil industry in the US. He's either a master strategist playing the retard or the luckiest bastard in the history of the united states.

What you're seeing is known as a power vacuum. Which means that Obama sucks.

So yea, we'll give him credit where credit is due as the world spins of the rails.

Yes, Obama gets no credit for his foreign policy. Credit is assessed once things are in the history books. It is always a possibility, though increasingly distant, that he had any sort of understanding or control over the situation.

What Johnny fails to understand is that the US policy is running in a very dangerous zone, which keeps getting smaller - prices can't go too low nor too high. This is the price of a con game.

No one is staying on the US Standard for oil, except to hurt their enemies .. not a great place to be.

I doubt if he can get, or has enough, gold to do that. Besides, you of all people should know, that if he puts the ruble on the gold standard, it'll be eaten alive. Believe as you wish, but with as many parties in league with the manipulation markets, to the point of murdering their own who don't take hook, sinker, and line... Russia has proven easy to crush financially. China doesn't want any part of it, but will play the public devil so as not to be potty trained as well.

Those nations don't have much choice. No single nation does. Not even democratic *cough* elections from people who do know better but chose worse. The war isn't on, it's just getting a bit of a public airing, again, again. We hang separately, or we hang together, seems to be the financial consensus. And it is being enforced. There is a lot of muscle involved.

Still, I don't mind if Russia goes to a gold standard. I'm curious what tools are at hand to spank naughty state actors more than what has been used. I doubt if they will go there, have just had their economy toyed with as if by an angry baby. They had been, what, the eight largest economy? What are they now? Pretty soon, Alabama will be their closest economic comparator. Gold standard? That'll last at most a year, or as long as Putin remains alive.

this is an open hot currency war at this point and its fast moving to kinetic stage. We're walking a very tight rope. If we push russia away... russia may well decide to seperate herself from the dollar completely. Her trade partners... china for example... could well do the same.

They stop pricing oil in dollars and start buying and selling it in other currencies. that blows the demand for the dollar all to hell.

You create two different economic circles in the world... an american one... bases on trading houses back and forth and creating money from thin air... and a russian one... based on oil and natural gas.

You create two different economic circles in the world... an american one... bases on trading houses back and forth and creating money from thin air... and a russian one... based on oil and natural gas.

If Putin goes onto the gold standard, then the Western financial system will simply drain away his gold reserves. If he stops allowing gold to leave the country, then he's not really on the gold standard, he's just got a fiat paper currency with a weird extrinsic limit on the money supply.

Quite simply, Gresham's Law will win: Vlad gets a pile of paper. If his country didn't have a resource-based export economy, going gold might be feasible, but he does, so gold would simply become another resource to export.

As long as nations use currencies (free float or backed by whatever), and debasement, to further their own political goals, no one wins. Nations should hold their currencies stable and let the markets battle it out.

"As long as nations use currencies (free float or backed by whatever), and debasement, to further their own political goals, no one wins."

Except that how its going to go down. The US can't afford to lose its built in systemic demand for the dollar. If it ever did lose that in a substantial way...you'd have the epic hyper-inflation train that i wrote about in the past.

Russia/China has tools in the bag as this gets hotter. They could do any or all of the following:1. dump all their US treasury holdings onto the market killing the dollar.2. trigger malware to break western banking, trading, and infrastructure.If you see any of these a hot war is not far off.

I wonder how they will attempt to sell a war against Russia to save the dollar as the reserve currency. No one other than Juan McAmnesty seems to care about Ukraine or their treatment of gays. I'm betting on an absurd false flag aided and abetted by the media, probably caused by a Navy ship mysteriously exploding if they follow historical precedent.

Russia's ability to back their currency with gold, or successfully create an oil and gas trading silo with select countries using a new fiat ruble is contingent upon a lower level of corruption by Russian officials than Western officials. I see no evidence of this.

of course it does. You can't deflate something that no one wants. No one gives a damn how much of a shortage there is for crap. No one cares if your crap currency is hard to get. No one wants it anyway.

regardless as I explained it won't be hard to get. There will literally tons of it around as nations dump it. Because as nations dump it... the Fed, using its idiotic keynsian models will actually think there is a shortage of dollars... and so it will open the flood gates like you cannot imagine.

"Russia's ability to back their currency with gold, or successfully create an oil and gas trading silo with select countries using a new fiat ruble is contingent upon a lower level of corruption by Russian officials than Western officials"

No. Its contengent on a willingness of russian officials to cooperate... and we're in the process of limiting their options to do otherwise.

Admittedly I don't understand with perfect certainty the goings on of currency manipulation. However, two years ago this month I had flaming Jewish banker tell me his biggest worry for the future was Russia going to the gold standard and asserting Russian sovereignty in it's financial dealings. He insisted that Russia wasn't economically viable because they had/have no rule of law in the economic sector. He set my mind reeling with his insistence that it had taken the banking industry years to bring Switzerland into the international fold and that Russia going to the gold standard and creating banking privacy would set the world back 100 years. I tried to ask more questions but they were obviously giving him a headache. Was the headache because I was too stupid? Possible. Or maybe he didn't like the nature of the questions. It sounded good to me... but I just don't know the ins and outs of currency.

There will literally tons of it around as nations dump it. Because as nations dump it... the Fed, using its idiotic keynsian models will actually think there is a shortage of dollars... and so it will open the flood gates like you cannot imagine.

Nah. I'm not saying it has to be an inflationist scenario. I'm saying you can't say that an epic currency war doesn't effect the deflationist position. An epic currency war throws both options into flux.

This is like all the discussions I have with soft-hearted folk bleedin' for Ukraine being bullied by those evil Russians.....they really don't understand the US and EU have been waging covert and economic war with them for years now. We are not innocent defenders of the downtrodden....we are doing most of the trodding........

Russian is not an existential threat to us, barely even to Ukraine, but if what we're doing is an existential threat to them....a people with ancient chips on their shoulders for very good reasons.......they've lived through shit only slightly better than nuclear winter......and they will nuke shit if we stir them up enough.

i don't think enough of the prep work has been done to create an alternative to SWIFT.

So, this is the ideal time for the US money masters to engineer a worldwide crisis - picking on either the Ruble or the Yuan as the two main possible rivals. Exactly what the end they envision is, I don't know, but I am certain that none of us will like nor enjoy the process.

We are not in a rising tide scenario here, and not all boats are carrying life preservers.

No. Its contengent on a willingness of russian officials to cooperate... and we're in the process of limiting their options to do otherwise.

Nobody will come to the party even if the Russians all hold hands if the cake is poison. Until the dollar is no longer the cleanest shirt in the dirty laundry it will be used. It is possible the dollar could be destroyed and there is no serious replacement available, but that's a tall order.

It has been pointed out numerous times that a LOT of nations right now could use a good war.Germany.France.Spain.China.Russia.Korea.Japan.Argentina.Venezuela.America. (just kidding)Most of the Middle East.

The currency wars have been ongoing for a couple years. But until about 1 month ago, they were just border skirmishes. Then Japan started firing some artillery, China has been prepping their mortars.

Also, history suggests that a shooting war would lead to increased government spending and borrowing, which means sort term inflation but long term strengthens the deflationary case.

As has been pointed out before on this blog, the old notion that war is good for the economy is only partly correct. In order for war to be good for the economy, you must destroy your competitors' factories. Notice I did not say enemies. Your competitors, whether friend or enemy, must have its factories destroyed.

"You can't deflate something that no one wants"- but who is it, that does not want dollars - except Russia, right now? All other currencies are going down the drain too- and those countries are "all in" with the dollar, because it is the last man standing. Russia is very isolated, now: but it has been in the past. Those folks are used to poverty and hard times; the rest of the west- not so much. Putin has a lot of support, his people will stand with him against the "evil Americans", and he may take an entirely different tack than anyone expects- as the grandmaster of chess.

Salt,in my Political Theory class in the 80's, one of our assigned reading books was an excellent analysis of:US and RussiaUS and ChinaChina and Russia

Although the teacher was a leftie (with libertarian leanings, I suspect), at least to my deep red Republican mind, he really opened my eyes to see that the world genuinely does not see America as a Knight in Shining Armor (TM), riding to the rescue of the world.

While I think China is a greater danger to US interests than Russia, I think Putin was a greater threat to the US Elites, so....Russia gets it first.

Since they are foolish enough to think the answer to a debt problem is MOAR DEBT, they probably are foolish enough to think they can "win" this currency war.

If Putin were smart, he'd do to the US and the EU what they have been doing to Russia, Serbia, Ukraine, et al. Namely, spend some money to domestically influence US and EU political events in the form of NGOs. Just like Western NGOs supposedly spread democracy by funding astro-turf movements in Russia, Ukraine, etc., the Russians should do the same in the West.

For example, the Russians could help finance a news organization that actively reported on black-on-white crime and forced those stories to the fore. Given that every day somewhere in the US there is a local news story of a black-on-white murder, it wouldn't be hard to find content. You just would need to fund some site like Drudge that already has a following and try to remain transparent so no one really knows that the Russians are paying the bill.

But the point is most Western nations, including the USA, are becoming more and more balkanized and will be susceptible to ethnic tension and violence. If someone with the means would focus support on stoking the fires of ethnic discontent, you might be able to foment more Feguson-type riots, but in this case the races would be reversed. But the more riots and ethnic tension you foment, the more the US and EU will have to turn their attention inward to prevent the breakup of their own nations.

Given how we foment conflict between various muslims, I am surprised no one has seen fit to try to do the same to us in the US and EU.

For example, the Russians could help finance a news organization that actively reported on black-on-white crime and forced those stories to the fore. Given that every day somewhere in the US there is a local news story of a black-on-white murder, it wouldn't be hard to find content. You just would need to fund some site like Drudge that already has a following and try to remain transparent so no one really knows that the Russians are paying the bill.

The problem with that is that it is The Russia Today Channel, and changing the name to RT won't fool anyone that it is a Russian-backed outlet. I know a few conservatives who refuse to visit the site because it is financed by those commie bastards.

The problem with that is that it is The Russia Today Channel, and changing the name to RT won't fool anyone that it is a Russian-backed outlet. I know a few conservatives who refuse to visit the site because it is financed by those commie bastards.

One more thing. In addition to being identified with Russia, RT also seems tone deaf on US politics. From the times I've visited RT, I have noticed they take a stance like the NY Times. They portrayed the Ferguson story just like the NY Times in which a black gentle giant was gun downed by a white cop. I think the Russians do this to highlight what they see as the hypocrisy of America preaching to the world about human rights and equality while having "racism" back home.

But if the Russians understood American politics they would realize that they are pushing the view espoused by our elite. The same elite who routinely attacks the Russians. So in effect they are helping the same Americans that would hurt them. Rather the Russians should have taken the majority white opinion of Ferguson in which most whites are outraged that a black thug is given so much attention when he attacked a store clerk and then a police officer.

Yesterday I was a news story on Drudge about how Russia is now reaching out to the far right parties like Marine Le Pen's in Europe. I think they realize their allies might be with conservatives in the West who tire of mass immigration and the trashing of our culture. Maybe RT might discover they could attract a wider audience in the US, despite their Russian name, if they promoted the view of the majority of white citizens here fed up with demographic replacement, endless cuddling of minorities and the gutting of our culture.

Maybe RT might discover they could attract a wider audience in the US, despite their Russian name, if they promoted the view of the majority of white citizens here fed up with demographic replacement, endless cuddling of minorities and the gutting of our culture.

I would be hesitant to say that's the view of a majority of white Americans. Many still believe in the magic of geography and the melting pot.

this is an open hot currency war at this point and its fast moving to kinetic stage. We're walking a very tight rope. If we push russia away... russia may well decide to seperate herself from the dollar completely. Her trade partners... china for example... could well do the same.

They stop pricing oil in dollars and start buying and selling it in other currencies. that blows the demand for the dollar all to hell.

You create two different economic circles in the world... an american one... bases on trading houses back and forth and creating money from thin air... and a russian one... based on oil and natural gas.

If your nation is a strong commercial or military power, and even better both, then your currency can be fiat based because people believe it will hold value, and acts as a call so to speak on your nation's commercial or military prowess. For example, for centuries Rome debased its currency ever further, with less and less silver in its common coinage and even less copper in its small coinage (gold coins hardly ever circulated they were so valuable). No one cared as long as Rome held military power. When Rome fell, its coins stopped circulating because the value outside the call on its power was worthless -- no silver in the denarius and no copper in the pennies.

ISIS had to issue silver backed coins because as yet no one trusts their staying power and ability to last (outside Turkey and Qatar's backing).

For Russia to have to issue precious metal backed currency is very bad, as it is signpost their commercial power has deteriorated, with oil price falls, and their military power is even worse.

A strong President who loved his country (that leaves out Obama on both counts) could therefore make a lifeline deal to Putin: an above market long-term contract to take up his oil, at a price that gives him survival politically, in exchange for leaving the Baltics alone, and helping crush the Iranian nuclear program.

Strategically, being able to play off Russia and the Saudis for oil security is in the long-term best interests of the US. I am shocked no one post-Cold War has thought of this, and advocated such a policy to lock in acceptable oil prices (not too high, and stable) while dialing down the harm that both Russia and Saudis do to the US: backing Iranian nukes and Sunni Jihadis respectively.

I have no way of predicting what the outcome will be of this. I don't think the US is as screwed as some are predicting, at least not because of anything Russia is doing, but if everyone dumps the dollar, yeah, things will get interesting.

We do have the benefit of having vast resources that are hardly being tapped yet. So perhaps there will be a short term disaster (length of time can be relative, say 5 or so years), but the long term could be alright if the right people are in charge.

In the end, no one hear can predict the outcome with any manner of accuracy, because the world is complex, and currency wars are extremely tedious and complex.

For everyone who thinks that the Ukrainian government is not our puppet:"Ukraine’s new financeminister, one Natalie Jaresko, is 1) an American citizen, granted a Ukraine passport simultaneously with her cabinet appointment, 2) a former State Department officer, 3) recipient of hundreds of millions of dollars in that $5 billion Victoria Nuland famously bragged of spending in State’s effort to yank Ukraine westward and 4) a participant in apparently extensive insider dealing via the investment management company she co-founded after leaving State."

"Finally, I submit that when the U.S. attempts to start another hot war, Americans will not buy it and will not participate. They will, instead turn their ire on the tyrants here at home."

Incorrect conclusion. Americans were extremely angry at the US government after WW One, and were quite happy to sit out WW 2 even though our nominal allies from the previous war were getting their butts kicked.

You just have to supply the right Pearl Harbor/USS Maine/Gulf of Tonkin/Lusitania-Arabic-Sussex/ World Trade Center stimulus to the American psyche, and it's OFF TO WAR WITH THOSE BLOODTHIRSTY TYRANTS!

John Wilson Bach is correct. The weakest link of all the "alt-right" groups are their ever-failing economic theories and predictions. The Achilles heel of the standard American right is their subservience to israel.

"The weakest link of all the "alt-right" groups are their ever-failing economic theories and predictions."

What failures of economic theories and predictions are you referring to, specifically? (And keep in mind that some guy's claim that gold is going to $10k an ounce, when that same individual just happens to sell gold, isn't an economic theory. It's salesmanship.)

You just have to supply the right Pearl Harbor/USS Maine/Gulf of Tonkin/Lusitania-Arabic-Sussex/ World Trade Center stimulus to the American psyche, and it's OFF TO WAR WITH THOSE BLOODTHIRSTY TYRANTS!

I don't think so. America was not involved in perpetual wars abroad back then. I see signs that the people will have none of it.The Syria gambit failed.The Bush doctrine is dead--fight them over there?, they are importing them here--because love.I do not think the Ukraine gambit will work.

The American right seems to have 2 major factions too it--One is intending to nominate Jeb! for president. They tend to think in Karl Roves "we are empire" terms and that what has been will be simply because ''merica!' . I think they are in for a fall--big time.The other faction looks to America pre-civil war--with a currency that appreciated over time and where power was not concentrated and we where a free people.

But, I am just a working class guy who detests dishonest men in suits.

Above all, you must understand that in the last days scoffers will come, scoffing . . . they will say, “Where is this ‘coming’ He promised? Ever since our ancestors died, everything goes on as it has since the beginning of creation.”

Noah, was gold not purported to move toward the 10k region for a reason? Or was it "just cuz?"

Every prediction of "da crash" was wrong and has been since at least 1974. I use that date because I have books from those days when it was said to be imperative that we buy gold because the US had... wait for it..... $500 BILLION! of debt on the books. lol

$500 billion sounds like a BIG number. And BIG numbers have meaning I've heard. The meaning was and is unsustainability. Too bad it has sustained itself for decade after decade. Name a theory, name a prediction. I don't care either way. It's the wrongness that matters.

And to Rabbi B,

Do you normally see economics in the Bible? Will God come for those who scoffed at the alternative news? Seems like a shallow interpretation.

As if it doesn't all tie together. Lazy, uninformed Statists. Shout your effiminate beliefs from the mountaintops, johnwilsonbach. And be sure you vote Republican and watch Faux News. Like all the rest, you'll be gone from here soon.

Noah, was gold not purported to move toward the 10k region for a reason? Or was it "just cuz?"

It was because the people selling it wanted you to buy it at those prices.

Every prediction of "da crash" was wrong and has been since at least 1974.

We have had several of them, and each time the government has massively intervened in the economy to stop a deflationary collapse. As Bernanke put it, they have this thing called a printing press. They use it when it's to their advantage.

Name a theory, name a prediction.

You're the one who made the claim that there were multiple economic theories and predictions from the alt-right that had failed, and you have been unable to name even one. It seems instead that you don't grasp the difference between an economic theory and an advertisement.

That's a fair observation, but are the arguments about fiat-currency, devaluations, bubbles etc rubbish in your opinion? To my working-class mind, the hubris of Keynes or Krugman is appalling in their belief that economic behavior is centrally driven by monetary/fiscal policies while I find the Liberal, lassaiz-faire approach ethically appealing.

I cannot vouch for the econ/finance stuff as I do not know the field. I am curious as to the basis for your scoffing other than "nothing bad has happened since 1974".

"I have been reading ZeroHedge about 5 years now and it has a "its (sic) on like Donkey-Kong" feel to it."

- it's my understanding ZeroHedge and godlikeproductions are on the same server, if that means anything.

I really don't think black helicopters will ever come thwumping through the skies. I think the slow degradation will continue, albeit with some small dramas played out here and there, eliciting further over-the-top commentary from the Ilk. More like a rotting from within than a fell swoop dropping of the curtain. Perhaps I am wrong... perhaps an EMP will occur and I will be found outside of Nate's compound, begging for scraps.

That isn't true that no one cared Whisky, the debasement of Roman currency was a huge problem in the eyes of the populace. The Roman solidus was introduced because the aureus was so debased as to be almost worthless. Debasement got so bad that eventually the Roman government stopped levying their taxes in currency and instead mandated physical goods and services performed for the empire.

Whether or not Russia's move is a signal of desperation, or the move of by a confident world power remains to be seen. But my take is that it isn't so much about saying FU to the US, though I am sure there is some of that, and more trying to insulate themselves from the inevitable market tremors. Russia has enough systemic problems as is.

Russia and China already have bilateral, dollar-bypassing trade agreements and both have some and are trying to get more with other trading partners. Nothing new there. Russia can trade oil, gas and gold for what it wants to import. It's natural gas brings in a lot of Euros which can be used around the world, etc. If it did come to war, the U.S. would drill its reserves faster than Obola could say federal lease. Moreover, these currencies are just temporary media of exchange. Nothing more. Trade will still go on, but different media will be used. Gold is always accepted. Needed commodities are always accepted. The system may be a little slower or more cumbersome without a single referent currency like the dollar, but it will still function. The secular financialization of everything, however, will be very difficult. European pension funds aren't going to be too interested in U.S. CDO's. Hell, even U.S. pension funds may be a bit leery of them.

At any rate, rather than leading to direct shooting war, this simply encourages the russians to speed up their move away from the dollar and the West. Oh, and they're taking the eastern Ukraine with them.

Vox has said a few times that the power of a model is in its ability to predict. Incessant false predictions speak for themselves concerning whatever economic models used by "alt-righters." What they are means nothing because the predictions arrive at an absolute consensus. Consensus on false prediction=weak point in movement.

As for the "it hasn't happened yet" snark, that's the entire point. It hasn't happened. You have said "this is the year" "this is the month!" for decades. Nobody said anything lasted forever.

For whoever said "but are the arguments about fiat-currency, devaluations, bubbles etc rubbish in your opinion? " Yes. Because they are wrong. Wrongness is rubbish. Had I made financial decision based on the prediction of people who frequent blogs such as this, I'd be dead broke.

Vox has said a few times that the power of a model is in its ability to predict. Incessant false predictions speak for themselves concerning whatever economic models used by "alt-righters." What they are means nothing because the predictions arrive at an absolute consensus. Consensus on false prediction=weak point in movement.

In other words, you can't name a single economic theory from the alt-right that has failed.

Zeno, you caught me. I am a spammer. I provided a link to my blog about progressives' desire for our lives (readership is up!). And, Progs in Drag, there is nothing effeminate about me, nor am I attracted to you, in the event that was your hope. And, Noah B, I have been reading this blog since before the days that I used to comment as Vitus_Bering.

Had I made financial decision based on the prediction of people who frequent blogs such as this, I'd be dead broke. Vox, isn't this posting just a lying attempt to disqualify? Why the logical response?

Someone tell me what options Russia has? They are allies with China and no country wants see their allies destroyed. China also covets Russian territory (and the minerals) in the East. I'm more nervous about these kinds of events based on my understanding of history... which tells me that the end games of these kinds of messes are never what anyone would have hoped. Russia has resources. How could they use them to get out of this mess and what other options do they have?

simplytimothy December 17, 2014 7:37 AM I have no idea what your unspoken assumptions are.

back when Russia took Crimea, i was raving about how it looks ( to *me* ) as if Obamalamadingdong is taking orders directly from Putin.

you notice that Obama does a lot of vocalizing and strutting about how much danger Russia is in, while at the same time:1 - taking actions that provide Russia with pretext to 'react' in ways that further Putin's agenda2 - taking NO actions that would actually mitigate or counteract Putin's agenda

i'm just pointing out that the ( almost certainly US induced ) actions of the West appear to be more of the same here.

numerous people have asserted that Russia will be hurt by this.

numerous other people have asserted that Russia / China / US are in a currency war.

when you are in a war, you expect to take damage ...

remember, Putin is a Judo ( whose prime philosophy is "use your opponents force against him" ) player and Russia as a whole is very proud of their Chess abilities.

even if Obama is NOT taking orders directly from Putin, he certainly has been doing everything he can to tear the US down ... while reading teleprompter speeches that he is building the US up.